Dave Lutz of Stifel Nicolaus has a roundup of what traders are chatting about ahead of the U.S. market open:
Good Morning! US Futures have been steadily sliding lower, and now rest off about 40bp as VIX trading accelerates (March Contract up 2% right now) — Main area of angst seems to be Ukraine, with the CDS popping 10% as Russia offers “no comment” on when they will release the next tranche of a pre-arranged $US15B bailout. Contagion is pressing Russia’s Ruble on record lows against the €, and can be seen in the weaker FX of Turkey, Hungary and South Africa as well. Eyes should remain on Brazil, who’s equity market seems to be a favourite target of EM short selling right now. EU markets are lower, with the DAX off 75bp in very light trading (20% below normal trends) — EU fins are off 1% as the Fed’s Capital Rules sparking profit-taking, and we are seeing some weakness in the PIIGS debt. In Asia, the Nikkei lost 50bp, but futures are off another 75bp as the $US-Yen has given up all of the BOJ’s induced gains from yesterday. China’s market managed a 1% bounce, breaking upside of the 200dma in heavy volumes. Aussie’s market bounced small, but the Miners are finally seeing profittaking, with the space off almost 1%. Keep an eye on the Retail group here in the US, as CAGNY continues, and the XRT (Retail ETF) is in a battle with the 200dma, and Homebuilders, as much negative sentiment is built up into the Housing Starts and Permits number this AM.
The 10YY is breaking lower, as we await the Fed Minutes – Traders will be interested to see if the Fed has been discounting the impact on activity from the “polar vortex”. The DXY is higher, with the $US making gains against both € and Yen — causing a slight headwind for commodities. Gold is weaker despite headlines India preparing to cut the Import Tax on the metal, while Energy’s tailwinds remain. Nat gas is surging another 7% this AM as traders scramble for March paper on collapsing supplies – WTI on YTD peaks into API data tonight, and Brent buoyed by Geopolitical factors in Libya, South Sudan, and Syria. A lot of eyes are on Coffee, after the biggest surge in 10+ years yesterday due to Brazil’s drought — it is adding another 1% this AM, and has gained almost 40% in the last week. Scheduled Catalysts today include PPI, as well as Housing Starts and Permits for January at 8:30, a Small POMO at 11, Fed’s Lockhart Speaks at 12:15, Fed’s Bullard Speaks at 1, and at 2pm the Fed Releases Minutes from Jan 28-29 FOMC Meeting. After the close we get API data for the Crude Complex, and Fed’s Williams Speaks on the Economy in New York at 7pm tonight.